In order to solve the problems such as significant frequency fluctuation and slow dynamic response under load disturbance in islanded microgrid which has a diesel generator (DG) as the primary source, an auxiliary frequency regulation method is proposed to improve the dynamic response process of the system. Firstly, the model of diesel generator system is established to analyze the impact on transient state due to main parameters, including inertia and response delay. Secondly, the energy storage system (ESS) with auxiliary frequency regulation based on droop control is proposed, and the engineering parameter and ESS's power margin design method are given. In addition, a small signal model of the DG-ESS system is established to prove the stability of the system. Finally, the experimental platform of DG-ESS microgrid is built, and the results verify that the proposed control strategy effectively reduces the transient frequency fluctuation under the change of static or motor load.